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An outcome of the Bonn renewables2004 conference MISSION Provide international leadership for the rapid expansion of renewable energy in developing and industrial countries – based on the cooperation of stakeholders from the energy, development and environment sectors.

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Strengthen policy frameworks for accelerating use of RE Facilitate appropriate use of RE in developing countries, including strengthening the regulatory environment and expanding access to public and private financing Build capacity to integrate, utilize, and regulate the use of RE at international, national, regional, and local levels Facilitate collection, analysis, and dissemination of information

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SOME FACTS AND PREDICTIONS Global warming trends very likely the result of human activities since 1750 (IPCC) Most of this impact the result of the use of fossil fuels The world needs more energy - 2/3 increase from Experts predict doubling of energy use between 2000 and 2040, tripling by 2070, and quadrupling by 2100 Most growth will take place in non-OECD countries Fossil fuels will account for 83% of overall increase in energy demand up to 2030 (IEA) Coal demand increases the most in absolute terms (China and India) Oil is expected to remain the dominant energy source worldwide (IEA base scenario) Renewable energy will account for 9% of power mix in 2030 (IEA WEO 2006)

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Energy demand must be better managed and reduced Energy users must shift to low-carbon technologies like RE New technologies must be developed that capture and sequester CO2 What does this mean?

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Figure 1: Global Investment in Sustainable Energy, Overall SE investment growing quickly Investment has more than doubled in last two years. Further 20% increase forecast for 2007, taking global investment to $85 billion.Investment has more than doubled in last two years. Further 20% increase forecast for 2007, taking global investment to $85 billion. Drivers go beyond the big three (oil prices, energy security, climate change) to include many more environmental mainstream issues.Drivers go beyond the big three (oil prices, energy security, climate change) to include many more environmental mainstream issues.

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VC/PE Investment Soaring Figure 3: 2006 Venture Capital and Private Equity Investment by Sector Source: New Energy Finance $804m $746m $664m $272m $163m $134m $127m $105m $93m $36m $35m $31m $4m Carbon Markets Marine Hydrogen Efficiency:Supply Side Biomass and Waste FuelCells Services & Support (CleanEnergy) PowerStorage Smart Distribution Efficiency:Demand Side Wind Solar Biofuels Mfc. CapacityTechnology figures are up until mid - December Source: New Energy Finance Venture Capital/Private Equity up 163% in one year.Venture Capital/Private Equity up 163% in one year. Biofuels edged out solar and wind to raise the most risk capital in 2006.Biofuels edged out solar and wind to raise the most risk capital in Most investment in wind has been in manufacturing capacity, not new technology.Most investment in wind has been in manufacturing capacity, not new technology. VCs shifting more to larger, later stage deals.VCs shifting more to larger, later stage deals. US dominates VC transactions. Clean tech in the US now ranks 5 th in VC at 9.1%.US dominates VC transactions. Clean tech in the US now ranks 5 th in VC at 9.1%. After the US, China was the second largest recipient of Venture Capital.After the US, China was the second largest recipient of Venture Capital.

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Figure 4: Public Market Investment by Sector Public stock markets have opened to RE Public markets up 140% in one year.Public markets up 140% in one year. Solar PV is the big winner on public capital markets.Solar PV is the big winner on public capital markets. European stock markets are the main destination for IPOs.European stock markets are the main destination for IPOs.

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Figure 5. WilderHill New Energy Global Innovation Index (NEX) Source: New Energy Finance, AMEX Dec-02Jun-03Dec-03Jun-04Dec-04Jun-05Dec-05Jun-06 AMEX Oil NASDAQ S&P 500 NEX AMEX Oil, NASDAQ, and S&P 500 rebased – 30 December 2002 =100 RE confused as only technology stocks Technologies and projects Continued growth uncorrelated to other sectors Clean energy stocks volatile, but doing well More corrections are expected, as happened in May 2006, but few predict crash.More corrections are expected, as happened in May 2006, but few predict crash.

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Figure Asset Financing by Sector Source: New Energy Finance $1.3bn $15.2bn $1.4bn $3.6bn $6.4bn Biofuels Biomass & Waste Solar Wind Other Renewables Financing for projects is still mostly for wind Wind is still the big winner at raising asset financing for projects. China the third largest location for asset financing, after US and Spain.

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VC/PE Investment in Energy Efficiency Source: New Energy Finance

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Investment in new renewables generating capacity - $21.5bn Investment in new technology & manufacturing capacity - $25.2bn Means that investors are expecting strong growth for RE IEA WEO2006: RE (ex hydro) will provide 11% of new capacity additions between 2004 and 2015 Wind alone provided 10% of new capacity in 2006 and its growth has been >9x faster than the power sector as a whole (24.5% vs 2.6%) IEA WEO2006: RE will account for 9% of power mix in 2030 (12% under Alternative Scenario That would require RE growth rate to drop from >20% in 2006 to 8%. SOME OBSERVATIONS Measured by capital investment, renewable energy is already a much larger sector than current energy production figures indicate. Recent capital build up is not a sign of short-term volatility, but part of a longer trend. The trend has continued through the first half of 2007.

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Investment in energy still policy-driven and public priorities are not only climate change, but also energy security and energy access Developing countries have fast-growing energy demand and unstable capital markets, which skews investment towards fossil fuel generation (proven, understood, large-scale, less capital intensive) Regulatory frameworks needed that accelerate and reward investment to scale up deployment of sustainable energy technologies at a pace and to a level necessary to impact climate change CHALLENGES

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To do at the local level Encourage local industries to invest in R&D for sustainable energy technology Work with local finance institutions to develop awareness & capacity to engage in the sustainable energy sector Collect data and use it to influence policy

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THANK YOU! REN 21 Renewables Global Status Report 2007 to be released July 2007? UNEP SEFI/New Energy Finance Global Trends in Sustainable Energy Investment 2007 to be released on 21 June 2007